Shockwave Medical: The Innovative Artery Declogger

Last Updated: 29. Februar 2024By

In the field of medical technology, there are constantly highly interesting innovations that allow companies to quickly grow into new dimensions. The same often applies to the stock prices of these companies. Today, I would like to introduce one of these innovative medical technology companies – Shockwave Medical – to you.

Company portrait The US company Shockwave Medical has developed a completely new treatment approach for the removal of calcifications in arteries: the so-called intravascular lithotripsy. Sound waves are precisely sent to the calcified part of the artery via a catheter to break it up. All previous studies and practical tests have been very successful. The company has been growing rapidly for years.

New treatment method for a typical lifestyle disease Calcification of arteries (atherosclerosis) is one of the typical lifestyle diseases of our time. An unhealthy lifestyle (diet, smoking, lack of exercise) leads to the formation of deposits of fat and calcium in the arteries – so-called plaques.

This makes the blood vessels stiffer and thicker, making it more difficult for blood to flow through. This can lead to circulatory disorders that can trigger a heart attack. Atherosclerosis is one of the leading causes of death in Western industrialized nations. It often also leads to secondary diseases such as coronary heart disease.

Usually, atherosclerosis is treated either with medication (blood pressure-lowering drugs) or through a surgical procedure (stent, bypass). In the case of stent surgery, attempts are usually made to break down calcifications with high-pressure balloons to expand the vessels for stent placement, or a small drill is used (atherectomy). Both methods carry risks, such as perforation of the artery. Shockwave Medical’s solution is less risky.

High growth in the fourth quarter And the new treatment method is successful. This is evidenced by the results of the fourth quarter: Shockwave Medical reported a significant increase in revenue of +41% to $203 million, which was over $3 million more than expected. The earnings surprise was even more significant, at $1.16 per share, compared to analysts‘ forecast of 26 cents less.

Profitable for years The company is expected to reach the milestone of $1 billion in revenue for the first time next year. And unlike many other growth companies, Shockwave Medical has been profitable for years.

Ambitious valuation An innovative product, high growth, and profitability – it is not surprising that the stock has an ambitious valuation – the price-earnings ratio (P/E ratio) is over 50. But given the strong growth prospects, this premium valuation appears justified.

Quality comes at a price in the stock market. You will never get bargain prices for stocks of this quality (with extremely high growth potential and a proven profitable business model). Of course, a certain willingness to take risks is required with such stocks, but often this pays off in the long run.

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